Simon Gibbs is associate partner of retail property agency CWM in New York. He works with retailers in the UK and US that want to expand internationally. The firm also plans to open a Hong Kong branch in late 2013.
Do you expect the number of global retailers coming to the UK to grow?
Absolutely. Retailers are all about “omnichannel” now, so they need key locations in large cities to build brand awareness. In the US, retailers who would previously want 500 stores now only have 200, then start to go international. Forever 21 and Victoria’s Secret are examples.
Are UK retailers still keen to break into America?
Definitely. Several small British brands have been showing at New York fashion week, such as Pretty Green, which suggests it might want to expand here. Shoe brand Irregular Choice is in New York and now looking in LA, and Dune is keen to open in the US. There are also more food operators coming over. Yo Sushi is testing locations in Washington DC and Wasabi has done a deal on a 4,000 sq ft restaurant in Times Square, New York. We are conducting a roll-out strategy for them, and they are looking to open a similar number of branches in New York to central London, where they have got about 30 sites.
What are the key locations for retailers looking to make the move?
The most popular location in the US is New York — Soho or Madison Avenue for the luxury retailers. In London, it is Brompton Road and Covent Garden. Small boutiques are very keen on neighbourhood areas such as Marylebone High Street.
What are the main challenges for retailers expanding internationally?
US retailers are quite shocked at the business rates they pay when they go to the UK, where you pay nearly 40%, which affects the amount of rent you can afford. When UK retailers come to the US they only pay around 3%-7% in real estate taxes, so rents can be seen to be slightly higher in the US.
UK retailers should be aware that leases in the US are not protected by the Landlord and Tenant Act 1954, so they may need to build in extensions to the end of their lease.